Benchmark indices opened sharply lower on Monday morning, tracking weak global cues and broad-based selling across sectors, with financials, IT and metal stocks dragging the market lower in early trade.
The 30-share fell 807.71 points, or 1.07%, to 74,430.28, while the Nifty 50 slipped 249.75 points, or 1.06%, to 23,393.75 as of 9:18 am.
The sharp decline came amid mounting concerns over surging crude oil prices after Brent crude climbed to $111 per barrel, intensifying fears of imported inflation for India, which relies heavily on crude imports.
Higher oil prices are expected to increase pressure on the country’s trade deficit, weaken the rupee further and raise concerns over fuel price hikes in the domestic market. The Indian rupee also weakened sharply, slipping below the 96 mark against the US dollar, adding to worries over imported inflation and sustained foreign fund outflows.
Market participants also remained cautious as rising US Treasury yields continued to weigh on emerging markets. The US 10-year bond yield climbed to 4.62%, reducing the appeal of riskier assets and prompting continued foreign portfolio investor outflows from Indian equities.
Selling pressure was visible across nearly all major sectors in early trade. Banking, IT, auto and metal stocks were among the worst hit, while broader market sentiment also remained weak with midcap and smallcap indices trading lower alongside the benchmarks.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said global cues are likely to keep domestic markets under pressure in the near term.
“Brent crude has spiked to $111 on absence of initiatives to open the Strait of Hormuz. Elevated crude may force another round of price hikes in petrol and diesel, which will have negative implications for inflation. The spike in US 10-year bond yield to 4.62% is another negative factor for emerging market equity markets,” he said.
He added that further depreciation in the rupee could aggravate the cycle of currency weakness and FPI selling, although policy measures to stabilise the rupee may be announced soon.
According to Vijayakumar, export-oriented sectors such as pharmaceuticals could continue to outperform amid the volatility due to their defensive nature and dollar revenue exposure.
He also noted that leading private sector banks remain fundamentally strong despite near-term pressure from foreign investor selling, making them attractive for long-term accumulation during market corrections.
Analysts said investors will continue to closely monitor developments in global crude markets, movement in bond yields and currency trends, as elevated energy prices could complicate the inflation outlook and reduce the possibility of aggressive monetary easing going forward.